How Much Money Can Be Transferred From India to USA?

Transferring money from India to the United States involves navigating a structured regulatory environment. This process is subject to specific rules and established limits. Understanding these frameworks ensures a smooth and compliant transaction, as regulations manage foreign exchange flows and address financial considerations for both the sender and recipient.

Indian Foreign Exchange Regulations and Limits

India’s foreign exchange control framework governs outward remittances, primarily through the Liberalized Remittance Scheme (LRS). This scheme allows resident individuals to send money outside India for various permissible purposes. Under the LRS, resident individuals, including minors, can remit up to USD 250,000 per financial year. This is a cumulative limit for all foreign exchange remittances made by an individual during that financial year.

The LRS covers a broad range of current and capital account transactions. Permitted purposes include private visits, expenses for studies abroad, medical treatment, gifts, and donations. It also extends to business travel, overseas employment, emigration, and the maintenance of close relatives residing abroad. Individuals may also use the LRS for certain investments, such as purchasing foreign stocks, properties, bonds, or making deposits.

Specific transactions are prohibited under the LRS. These include remittances for purchasing lottery tickets or engaging in sweepstakes. Sending funds for margin trading or margin calls to overseas exchanges is also restricted.

The scheme prohibits acquiring Foreign Currency Convertible Bonds (FCCBs) issued by Indian companies in the overseas secondary market and engaging in foreign exchange trading abroad. Remittances to countries identified as non-cooperative jurisdictions by the Financial Action Task Force (FATF) or to individuals and entities posing terrorism risks are forbidden. Gifting foreign currency to another resident for credit to their foreign currency account held abroad under the LRS is not allowed.

For Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs), different avenues exist for repatriating funds. Funds held in Non-Resident External (NRE) accounts and Foreign Currency Non-Resident (FCNR) accounts are fully repatriable without an upper limit. These repatriations are generally not subject to Indian taxation. In contrast, funds in Non-Resident Ordinary (NRO) accounts, which hold income earned in India, can be repatriated up to a limit of USD 1 million per financial year after applicable tax deductions.

Indian banks require specific documentation from the remitter. A Permanent Account Number (PAN) card is mandatory for all LRS transactions. Individuals must also submit Form A2, which is an application and declaration form. This form requires details about the foreign exchange needed, its intended use, personal information of the remitter, and banking details. Banks enforce these regulations and ensure compliance before processing any outward remittance.

Common Permissible Purposes for Transfers

While the Liberalized Remittance Scheme (LRS) outlines the general framework for sending money abroad, specific purposes often require additional documentation beyond the standard Form A2. The type of supporting documents needed depends on the nature of the transaction.

When remitting funds for education abroad, documents typically include the university’s admission letter and a detailed fee structure from the foreign educational institution. This applies to payments for GMAT, GRE, TOEFL exams, or a Guaranteed Investment Certificate (GIC) for Canada.

For medical treatment overseas, documentation like a doctor’s certificate and hospital bills from the foreign medical facility are required. If the remittance is for the maintenance of relatives living abroad, a simple declaration of the relationship between the remitter and the beneficiary is sufficient. When sending money as a gift, a declaration stating the nature of the gift is requested.

Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs) who sell property or other assets in India may repatriate the proceeds. This process requires specific documentation related to the sale, such as the sale deed and tax clearance certificates. The LRS also permits resident individuals to make certain investments abroad, including in foreign stocks, properties, bonds, and deposits.

Methods for Sending Money

After completing Indian regulatory compliance and gathering purpose-specific documentation, individuals can proceed with various methods to transfer funds. The choice of method depends on factors like speed, cost, and convenience.

Bank wire transfers, conducted via the SWIFT network, are a common method for international remittances. To initiate a wire transfer through an Indian bank, the sender needs the recipient’s full name, address, bank name, account number, and the SWIFT/BIC of the receiving bank. International transfers from India to the USA usually take between one to five business days. Fees for international outgoing wire transfers from banks can vary, and banks may also charge additional currency conversion fees.

Beyond traditional banks, several money transfer operators provide alternative services. Companies like Wise, Remitly, and Western Union offer digital platforms for international remittances. These services present varying pros and cons in terms of transaction speed, exchange rates, and associated fees. They often offer competitive exchange rates and lower fees compared to some traditional banks, but still comply with India’s foreign exchange regulations, including LRS limits. When selecting a transfer method, compare exchange rates and transaction fees across different providers, as these can significantly impact the final amount received by the beneficiary.

Tax Considerations in India and the USA

Understanding the tax implications in both India and the United States is an aspect of international money transfers. The tax treatment depends on the nature of the funds being transferred and the residency status of both the sender and the recipient.

In India, the tax implications for the sender relate to the source of the funds. If the money transferred represents income earned in India, such as salary, rental income, or capital gains, it may be subject to Indian income tax or capital gains tax before remittance. Funds transferred from Non-Resident External (NRE) accounts or Foreign Currency Non-Resident (FCNR) accounts are generally not subject to Indian income tax upon repatriation to the USA. Tax Collected at Source (TCS) provisions also apply to foreign remittances under the LRS. There is no TCS levied on remittances up to ₹7 lakh in a financial year. For amounts exceeding ₹7 lakh, the TCS rate varies depending on the purpose.

For the recipient in the United States, general remittances received for maintenance or as gifts are not considered taxable income. The donor, or sender, is generally responsible for paying any applicable gift tax, not the recipient. For 2024, an individual can give up to $18,000 per recipient annually without triggering gift tax or using their lifetime exemption. If a gift exceeds this annual exclusion amount, the excess reduces the donor’s lifetime gift and estate tax exemption, which is $13.61 million per individual for 2024. If a gift exceeds the annual exclusion, the donor must file Form 709, the U.S. Gift (and Generation-Skipping Transfer) Tax Return, even if no tax is immediately due.

U.S. recipients must be aware of foreign gift reporting requirements on Form 3520, “Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.” This informational return is required if a U.S. person receives gifts totaling more than $100,000 from a nonresident alien individual or a foreign estate in a single tax year. Filing Form 3520 is mandatory for reporting large foreign gifts, but it does not typically result in the recipient owing tax on the gift itself.

If the transferred funds represent income earned from foreign sources, such as salary, business profits, or rental income from India, this income is taxable in the United States. In such cases, foreign tax credits may be available to help prevent double taxation. Consulting with qualified tax professionals in both India and the USA is advisable for personalized guidance.